I got my eye on AUD/USD today!
Specifically, I’m checking out a possible break-and-retest situation on the 15-minute time frame.
Before moving on, ICYMI, yesterday’s watchlist looked at CAD/JPY’s short-term range support ahead of U.S. traders trading for the first time this week. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
The UK sold 4 billion GBP of gilts at the highest yield in 16 years on Wednesday, underscoring the elevated returns governments must offer to lure investors after more than a year of interest-rate hikes
U.S. factory orders miss at 0.3% m/m in May (vs. 0.7% expected) as surge in civilian aircraft orders were partially offset by sluggishness likely caused by higher interest rates
FOMC meeting minutes showed on Wednesday that a slower pace of hiking is likely ahead; 12 out of 18 members expect at least two more hikes this year
U.S. crude oil gained about 3% on Wednesday to catch-up with Brent’s Tuesday gains
Australia’s trade surplus widened from 10.45B AUD to 11.79B AUD as exports (+4.4% m/m) outpaced imports (+2.5% m/m). Increases in fuel exports helped offset a decline in key iron ore and metal exports.
Chinese banks have stopped buying bonds issued in the Shanghai free trade zone after regulators increased scrutiny of the $18 billion market
PBOC set its yuan fixing at 7.2098 per dollar, 360 pips stronger than the average estimate in a Bloomberg survey and marked the largest such gap since November
SNB governing board member Andrea Maechler said further rate hikes “cannot be ruled out”
German factory orders rocketed from 0.2% to 6.4% m/m in May with increases seen both domestically and abroad
Price Action News
Both AUD and JPY saw volatility during the Asian session as traders priced in the Fed’s hawkish June meeting minutes and their concerns over China’s uneven growth.
AUD dipped on the news that China’s banks aren’t buying bonds issued in the Shanghai free trade zone and limiting funding options for at least 50,000 foreigner-friendly companies.
The comdoll eventually recovered, however, probably because some traders are taking profits (read: staying on the sidelines) ahead of the labor-related data parade scheduled in the U.S.
Meanwhile, USD/JPY trading near its July highs during the U.S. session encouraged speculations of a “yentervention” during the Asian session. Despite a lack of direct catalysts, JPY posted gains against its major counterparts.
U.S. Challenger job cuts at 11:30 am GMTU.S. ADP report at 12:15 pm GMTCanada’s trade balance at 12:30 pm GMTU.S. initial jobless claims at 12:30 pm GMTU.S. trade balance at 12:30 pm GMTU.S. final S&P services PMI at 1:45 pm GMTU.S. ISM services PMI at 2:00 pm GMTU.S. JOLTS job openings at 2:00 pm GMTEIA crude oil inventories at 3:00 pm GMTJapan’s average cash earnings and household spending at 11:30 pm GMTJapan’s leading indicators at 5:00 am GMT (July 7)
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The Fed’s hawkishness and concerns about the recessionary impact of higher interest rates in general limited the demand for the “risky” AUD during the Asian session.
Luckily for AUD bulls, AUD/USD’s selling looked like it stopped at the .6670 area.
Has AUD seen its lowest levels today?
There may be enough AUD/USD bulls around the current prices as it’s near today’s Pivot Point (.6670) line, 100 SMA support, a broken trend line resistance, AND the 38.2% Fibonacci retracement of today’s upswing.
That’s a long list of potential support lines!
Look out for a bounce from .6670, which could take AUD/USD to its previous highs near the R1 (.6680) if not the big .6700 psychological handle.
If today’s U.S. labor market data parade supports the Fed’s hawkish path and July rate hike speculations, then you also gotta be ready to aim for new session lows.
The .6650 minor psychological area is a good spot for the bears but you can also aim for the .6640 lows depending on the momentum.